Eastern Shore Sun JULY 2022 23
A FINANCIAL MOMENT
Protecting your money
Damian Gibson, Financial Adviser and Partner, Elevate Wealth THERE is no doubt that recent market volatility and high inflation have created uncertainty when it comes to retirement planning. In the current environment it is important that your financial plan is robust enough to ensure economic conditions don’t get in the way of your future prospects. Here are some aspects to consider if you’re retired or heading towards retirement.
How does Services Australia assess your primary home if you’re away? Hank Jongen General Manager Services Australia HELLO everyone. If you’re receiving payments from Services Australia and own your principal home, you are defined as a homeowner. You have a lower asset limit, and generally your home is an exempt asset and won’t be looked at under the assets test. How does Services Australia assess your principal home if you’re away from it for a while for a holiday, or to look after mum or dad? For temporary absences, everyone can be away from their home for 12 months
before it becomes an assessable asset. In most circumstances, after 12 months you are defined as a non-homeowner, you are assessed with the higher asset limits, and your home is an assessable asset. There are different rules for people who leave their home to either receive care from someone or provide care to someone. If you have to leave your home due to illness and move to enter a care situation, the value of your principal home is an exempt asset for Services Australia’s assets tests for two years from the date you entered care. Care situations include
moving into an aged care facility, or moving in to live in a private residence to receive a substantial level of care for at least 14 consecutive days. This means that if you have to leave your home to live with your adult child so they can provide substantial care for you, your home can be exempt from the assets test for two years. The same rule applies if you have to leave home to provide care to someone in their home. So if you leave home to provide a substantial level of care to mum or dad at their place, then your home won’t be treated as an asset by Services Australia for
two years either. However, if you’re away for more than two years, you will then be assessed as a non-homeowner, you’ll be assessed under the higher asset limits, and your home will be an assessable asset. If you rent your house out while you’re absent, that doesn’t change how it’s assessed under the assets test. But remember, the net rental income is assessable immediately under the income test and could affect your rate of payment. You need to let us know if you’ve started to receive rental income within 14 days. See you next month.
Futureproofing your income (and balance)
Most retirees use their superannuation to help meet their income needs in retirement. In most cases, the money inside superannuation will be invested in assets subject to volatility. In times of economic downturn volatile assets will generally decline in value. An incorrectly structured asset portfolio may result in the need to sell volatile assets to fund your regular income. This will lead to losses and can have a negative impact on the portfolio in the long-term
withdraw from your super income stream. This new minimum has been extended for financial year 2022/23. If your situation allows you to draw less from your super you have the opportunity to preserve your balance during volatile times.
Boost your Centrelink
If you’re eligible, the Age Pension you receive is determined by either an asset test or income test. In both cases, if your super goes up in value, the age pension you receive might reduce. The good news is that it also goes the other way. If your super has reduced in value over the last several months, there is a high chance you are entitled to a higher Age Pension. For this to happen, Centrelink have to be notified of the change in your super balance.
Review your risk and assets Do you know how
Reduce your super income stream
When your superannuation is in a pension phase you are obligated to withdraw a minimum amount per year, ranging from 4-14 per cent, depending on your age. In 2020 the Australian Government announced a temporary 50 per cent reduction in the minimum annual amount that you must
Damian Gibson
your super is invested? Do you know how much risk you are taking on? When you are nearing retirement or in retirement, protecting your assets becomes equally, if not more important than, chasing high returns. It is essential that you review and understand how your money is invested and that you are comfortable with the level of risk taken on. The past few months have been tough on super balances. Unfortunately, nobody knows when things will start improving. Seeking professional financial advice in times like this is invaluable both to protect your money and to provide a level of certainty and direction.
Information in this article is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.
